Significant Improvements in Environmental Management Quality

Many companies are actively working to develop a sustainable ecosystem

The PGI 2024 results showed that Hai Phong ranked first overall, achieving outstanding scores in all four sub-indices with a total of 29 points. It was followed by Vinh Long (28.16 points), Ha Nam (28.04 points), Bac Ninh (27.78 points) and Binh Duong (27.64 points).

Tracking the level of improvement

The Provincial Green Index (PGI) is coordinated by the Vietnam Chamber of Commerce and Industry (VCCI), in partnership with the U.S. Agency for International Development (USAID) and private partners, to assess the role of environmental protection within Vietnam’s development strategy. Developed and refined over the past six years, the PGI, like the PCI, gathers business perceptions and conveys the collective voice of the business community regarding the quality of environmental management to authorities at all levels.

According to Mr. Dau Anh Tuan, Deputy General Secretary of VCCI and Director of the PGI Initiative Project, a locality is considered to have good environmental management quality when it makes efforts to prevent and minimize pollution and the negative impacts of climate change (subindex 1); implements regulations and reasonable measures to ensure compliance with environmental laws without imposing a heavy burden on businesses (subindex 2); promotes and widely shares green practices, including green purchasing (subindex 3); and encourages the greening of production and business models through specific policies and support programs (subindex 4).

The results of PGI 2024 showed that the median score of provinces and cities increased from 21.9 points in 2023 to 24.9 points this year. Notably, all 63 provinces and cities in this year’s PGI ranking showed improvement across all four subindices compared to 2023, revealing two significant trends. The greatest improvements were in subindex 4, which measures incentives and support services (up 1.3 points), and subindex 2, which covers regulatory standards (up 1.14 points). Subindex 3, related to leadership-assistance, also increased by nearly 1 point, while the smallest improvement, 0.15 points, was in the subindex for minimizing pollution and preventing natural disasters and climate change.

The evaluation report showed that the implementation of environmental regulations at the provincial level is being strengthened, resulting in higher levels of environmental compliance among enterprises. In subindex 1, 59% of enterprises reported good environmental quality, up from 57% in 2023; 31% of businesses noticed a decrease in pollution, compared to 29% last year; and 56% said pollution is no longer a problem - an increase of 11 percentage points from 2023. In subindex 2, the tightening of enforcement is evident: in 2024, 53% of enterprises were inspected by environmental authorities, up from 46% the previous year; 81% said localities strictly sanctioned environmental violations, an increase of nearly 6.9 percentage points; and 78% of enterprises agreed that local authorities acted promptly to address pollution issues, up 7.3 percentage points.

PGI 2024 data, along with previous evidence, showed that tightening regulations is a strong motivation for promoting green upgrades, especially among businesses targeting the domestic market. In subindex 3, 20% of businesses say that legal requirements are the main reason for their green upgrades, up from 14.3% in 2023. Consequently, improved enforcement is linked to 49% of enterprises upgrading green practices (subindex 3) and 36% operating in the green industry (subindex 4), increases of 10 and 5 percentage points respectively compared to previous benchmarks.

Unofficial costs and environmental pressure on businesses

According to the PGI 2024 report, as the number of inspections and the strictness of regulations increased, businesses expressed greater frustration with procedural burdens and the fairness of inspections and related activities. In 2023, only 5% of enterprises believed that environmental inspection officers imposed excessive regulations, but this figure more than doubled to 11.5% in 2024. Only 1.1% of enterprises reported coordination between inspection teams from different agencies to reduce procedural burdens, a slight decrease from the previous year. About a quarter of enterprises considered the inspections fair based on criteria such as the validity of the issues raised, detection of violations, sanction decisions and fine levels, an increase of 5 percentage points from the low of 30% in 2023.

More alarmingly, the percentage of enterprises reporting unofficial fees during inspections and environmental checks has more than doubled: 50% of businesses nationwide confirmed paying such fees in 2024, compared to only 22% the previous year. Therefore, although inspection activities have played an important role, much effort is still needed to convince businesses that inspections are necessary by improving the quality of procedures and regulations that businesses must follow.

Vietnam's economic growth has reached a critical turning point. Despite impressive achievements in improving the national average ranking, these gains are threatened by rising environmental issues and natural disasters that damage infrastructure, disrupt production and business activities, and jeopardize people's livelihoods. The report emphasized the urgent need for Vietnam to establish a robust management system enabling policymakers to effectively address these challenges while balancing the convenience and competitiveness of the business environment with controlling pollution and climate change, failing which sustainable economic development could be at risk in the long term.